An aristocracy occurs when a small, privileged ruling class
controls government and most of the wealth of a country. The economic and associated
political inequality in the United States is moving toward an aristocracy. Wealth
and political power are increasingly concentrated among extremely wealthy
individuals and large corporations. These financial elites successfully
influence government policies to enhance their wealth and power. A few of the
many examples include the Supreme Court ruling that allows unlimited donations
to candidate-affiliated PACs, the special tax breaks for hedge fund managers,
and federal deposit insurance for risky derivative investments by large banks. The
federal deposit insurance for banks allows large banks to keep the profits from
high risk investments, but have government bailouts if the bank gets in trouble
from losses. This gives large banks an incentive to use customers’ savings for high
risk investments rather than for loans to other customers. Federal insurance
for high risk investments by banks was eliminated after the financial crisis of
2008, but at the initiative of Republicans was activated again in the budget
compromise of 2014. As this example shows, the financial elites present
arguments in terms of deregulation, but in practice they actually want and get
regulations that favor their economic interests.

Both Republican and Democratic politicians in the U.S. act
to enhance aristocracy; however, aristocratic ideology is much stronger for
Republicans and has come to openly dominate their economic policies. Their
economic policies appear to be set by the financial elites who control the party
through donations. Historically, economic conservatives advocated limited
government spending and avoiding deficits. However, the Republican
establishment tends to now consider deficits acceptable when the deficits result
from economic policies favoring the financial elites. Vice President Dick Cheney
summarized this position with his well-known comment that “Reagan proved that
deficits don’t matter.” In effect, the current Republican establishment has reversed
the basic principles of economic conservatism. The lack to true economic
conservatives is making the political processes out of balance.

The economic imbalance can be seen by looking at the percent
of income that goes to the upper 1 percent of wealthy individuals. In 1928
before the great depression, the upper 1 percent obtained 23.9% of the income
in the U.S. After the depression, that number declined to about 10% in the
1970s. Prosperity was widely shared during that time. The number began
increasing in the 1980s (Reagan administration) and rose to 23.5% in 2007
before the financial crisis of 2008. After the financial crisis of 2008, the
number dropped, but is rising again. (Graphs and additional information can be
found by an internet search for “top1percentUSA” and at https://commons.wikimedia.org/wiki/File:2008_Top1percentUSA.svg.)
This history suggests that economic instability occurs in the U.S. when about
23% of income goes to the upper 1% of wealthy individuals.

The basic strategy of the financial elites and their agents
in the Republican establishment appears to be to keep the typical voters
distracted by social issues such as abortion and same-sex marriage. While these
controversies about social issues rage, the financial elites inconspicuously
set self-serving economic policies. The financial elites appear to be largely
indifferent to the social issues and are willing to go along with whatever
position allows them to implement their self-serving economic policies. This
strategy has been very effective at getting voters to support politicians who
implement economic policies that are detrimental to most voters. The next blog
article on authoritarianism in U.S. politics discusses another factor that
causes some voters to support candidates who advocate detrimental economic
policies.

The financial elites and their agents claim that anyone who
challenges this increasing aristocracy is promoting “class warfare.” This
accusation, of course, is actually another distraction that is intended to allow
them to continue their dominance of economic policies.

Predictions

To me it is obvious common sense that a healthy economy has
broadly shared wealth. However, congress, the president, and the Supreme Court
all readily implement policies that are favorable to the financial elites and
promote aristocracy. Republicans are generally stronger and more open advocates
for aristocratic policies than Democrats, but the financial elites obviously get
what they want from both parties.

I believe that the assumption that deficits do not matter as
long as the financial elites are doing well is profoundly wrong. The resulting
aristocracy generates economic and political instability and will cause
increasingly severe economic oscillations and crises. In addition, China
currently holds a large amount of U.S. debt and is in a position to potentially
create economic instability in the U.S. or to extort the U.S.

I do not expect that politicians within either the Republican
or Democratic political parties can break free of the entrenched dominance of
economic policies by the financial elites. I expect increasing economic and
associated political turbulence. At some point, articulate, independent
candidates will run for office and make the damaging economic policies clear. This
can be achieved by focusing on the biased aristocratic economic policies and
does not require a more socialistic economy. The independent candidates will
get strong support from a range of voters and lead a stunning rejection of the
established political parties. Some conservatives will recognize that their
efforts to make no compromises on social issues have resulted in their support
for politicians who are ruining the economy. These independent leaders will also
hopefully make the financial elites realize that their long-term economic
interests will be best served by less aristocratic economic policies.

Copyright notice.
The author, James E. Kennedy, authorizes and grants license that the contents
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